How Instagram Could Become an E-commerce Powerhouse

Before this year, it wasn’t easy to sell something on Instagram. Of course, that didn’t stop people from trying: app developers and retailers both created created a number of clever work-arounds, such as allowing customers to buy products featured on the platform by liking or commenting below posts. But Instagram never made it easy. There was no way, for example, to include a hyperlink in captions, making it hard to connect potential customers with an outside Web site. Instead, many retailers (and other Instagram users) were forced to rely on the one allotted space where a clickable U.R.L. is allowed: inside the bio on their profile. Still, there was no formalized way for companies to make money on Instagram, even when they could on Instagram’s parent company, Facebook.

Now, however, C.E.O. Kevin Systrom is trying to make it easier—finally—to shop on Instagram. You won’t be able to make purchases from within Instagram’s app, but Instagram’s 20-something retail partners—which include Abercrombie and Kate Spade—will now be able to add an icon to their pictures, Bloomberg reports. Tapping the “Tap to view products” icon brings up information about the item and how much it costs, right inside the app. There’s no in-app purchasing functionality yet: users will still have to take the initiative to go to retailers’ Web sites or, God forbid, visit a brick-and-mortar store location to buy an item.

So far, few companies have managed to successfully bridge the gap between social media and e-commerce. Facebook currently has a Craigslist-like product called Marketplace that lets users buy and sell goods to others nearby, but it has yet to catch on in a meaningful way. Twitter has experimented with its own “buy button” for goods on its platform. A number of start-ups, like Spring, an “Instagram for shopping” app, have sprung up to try to meld together an inherently visual medium with an opportunity to sell products to people on their phones, but none have become a major commercial success. Instagram, meanwhile, is well-positioned in theory to capitalize on the millions of users who engage daily with brands, and celebrities hawking brands, on its popular platform. And the company appears to be moving in that direction: Instagram has begun rolling out the ability for businesses and certain users to toggle back and forth between multiple Instagram accounts, making it easier for commercial use. Instagram could also begin diversifying the sources of its revenue, which currently comes primarily through advertising, by allowing retailers or bloggers to add affiliate links, with the possibility of revenue sharing when a user makes a purchase through the app. The company is already hugely profitable, with expectations to generate $3.2 billion for Facebook in 2016, so Instagram may not be in a rush to monetize in the same way that Pinterest is. But it seems like Instagram is finally recognizing its potential power in the e-commerce market.